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As you move along the continuum from indemnity insurance plans to Health Maintenance Organizations (HMOs), you find that organizations have progressively greater control over the delivery of care. A parallel continuum goes in the same direction - more control usually limits the choices that providers and members are able to make. Providers are subject to utilization management policies and members are more limited in their choice of providers.
When managed care organizations began, their approach was to managing both the financing and delivery of healthcare. This was very different than that of traditional indemnity insurers, which only handled the financing of healthcare.
In these organizations, physicians of the managed care organization work closely with other physicians to control healthcare delivery decisions. In an HMO, utilization management becomes a global, organizational concern, which starts the minute the member enrolls in the plan.
In between these extremes are many other types of insurance plans and managed care organizations. The following is a brief description of the typical managed care plans found today.
Health Maintenance Organizations
HMOs are responsible for both the financing and the delivery of comprehensive healthcare to their enrolled members. They can be viewed as a combination of an insurer and a healthcare-delivery system. These two functions are usually more tightly integrated in a HMO than in other managed care organizations.
Preferred Provider Organizations
Preferred Provider Organizations fall between indemnity insurance and HMOs. PPOs evolved to address a major concern consumers had with HMOs: limited provider choice. PPOs offer the feature of provider choice found in indemnity insurance, yet maintain some of the managed care provisions found in HMOs. PPOs are organizations that assemble a large panel of providers, called Preferred Providers.
Point of Service Plans
Point of Service Plans, or open-ended plans, are transitional managed care products that can be viewed as hybrids of HMOs and indemnity insurance. They were developed to combine the effective management features of HMOs with the provider choice found in indemnity plans.
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